Directors' Authority to Allot Shares
Authorisation must state the maximum amount of shares that may be allotted under it, and specify the date on which it will expire, which must be not more than five years from either:
- In the case of authorisation contained in the company's articles at the time of its original incorporation, the date of that incorporation;
- In any other case, the date on which the resolution is passed by virtue of which the authorisation is given.
The authority to allot may be general or confined to a specific allotment and may, but need not, impose conditions. The authorisation may be renewed or revoked at any time by ordinary resolution.
Under the Companies Act 2006, existing shareholders have the right to be offered shares pro rata to their existing shareholdings before any new shares are allotted. This is called a pre-emption right. The directors of a company may be given the power to allot shares as if the pre-emption rights did not apply by the shareholders passing an appropriately worded special resolution.